ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

Stock markets have rebounded strongly following last week’s panic sell-off that pulled the benchmark S&P 500 down to a low at 1820.66. The gains have been so large, +129 points (so far) that it has now isolated the Sep.’14 decline from its high of 2019.26 into a three price-swing pattern. This can be interpreted three ways – the perma-bears describe this as a 1-2-1-2 sequence within a developing five wave impulse decline – the perma-bulls as ending a zig zag correction within a developing uptrend – but realistically, this is neither! Through a comparison with many other global indices, and also an in-depth analysis of the preceding uptrend ###that began from the June ’12 low, we can determine the Sep’14 high at 2019.26 ended a 3rd-of-3rd wave high within its prevailing uptrend, but this is by no means its entire completion – more downside is possible during the next few months. This theme is corroborated by Emerging Market indices that turned lower from an early-Sep. peak and mirrored by other key indices in Asia. Translated back into the S&P, two shorter-term outcomes are possible in this overall decline evolving during the next few months – the current upswing from 1820.66 ends slightly below the 2019.26 peak towards 1991.00+/- as the ongoing pattern develops into a double zig zag, or it extends slightly above to 2038.00+/- before staging the next decline as part of an expanding flat pattern. Either way, the perma-bulls and bears will be left wanting as this scenario unfolds. For detailed analysis of this theme and how this action translates into European and Asian indices, please view the accompanying wave counts in this latest report. 23rd October 2014

Financial Updates Currencies

Currencies (FX)

The US$ dollar index is holding up quite well during the last few days, lifting higher from the recent pullback low of 84.47. The preceding decline into this level unfolded into a typical three wave corrective sequence that confirms the larger uptrend for the dollar remains intact, but there remains a short-term risk of a deeper retracement towards 83.95 if the overhead resistance at 86.01 cannot be overcome during the next few days. The Elliott Wave count describes a larger five wave impulse pattern in upward progress from the May ’14 low of 78.90 with ultimate upside targets ###to 88.80+/-. This is expected to take another couple of months or more before attempting such levels whilst the US$ dollar continues to attract safe-haven buying with the backdrop of volatile stock markets and a weakening Euro. As the US$ dollar moves into these upside targets, a quantum change is forecast as we look forward into 2015. The up-coming ‘inflation-pop’ for commodities will almost certainly be accompanied with a weakening US$ dollar, so at some stage, we expect the fundaments to switch around. The Euro/US$ is currently trending lower to ultimate downside targets of 1.2184 but is taking a pause before resuming lower. The US$/Yen is trending lower having ended a multi-year advance into the Oct.’14 high of 110.08. Shorter-term, a counter-trend zig zag rally began from 105.19 with upside targets to 108.27+/-. The Aussie/US$ has just completed a short-term triangle pattern and is now preparing to break lower to continue its downtrend – next targets are towards 0.8473+/-. 23rd October 2014

Financial Updates Bonds

Bonds (Interest Rates)

US10yr yields remain in limbo awaiting a break out of the recent range between 2.655% and last week’s low of 1.912% that would determine the larger, ongoing trend for the next several months. Even though the Federal Reserve has softened its monetary tightening stance during the last week, dealers continue to position themselves with expectations of rising long-dated yields.### But the context cannot be ignored that recent declines have now traded in positive correlation to stock index declines – if these are still in the early stages of continuing lower during the next couple of months, can the US10yr yield buck expectants and trend lower, even breaking into a new record low by year-end? Certainly a break below 1.912% would secure that forecast. The DE10yr yield continues its larger five wave impulse declines from the Jan.’14 high of 2.051% but is engaged in a short term counter-trend recovery from its recent low of 0.666% per cent. Upside targets measure towards 0.906% to 0.957% but once tested, a final decline is set to begin with downside targets to 0.536%. 23rd October 2014

Commodities

Gold is walking a fine line between an immediate resumption of its downtrend that began from the March ’14 high of 1392.30 with an imminent break of its horizontal lows at 1180.00+/- or extending higher within an evolving descending triangle pattern with upside targets to 1307.65, max. 1338.68+/-. All depends on whether it ###can maintain the attraction of safe-haven buying that has begun since global stock markets began to decline from the Sep.’14 highs. At the moment, gold remains stable around the 1245.00=/- level having already traded to 1255.35, but silver is dragging lower even though it is also holding above support traded last week at $17.00 dollars. Looking further ahead, gold’s larger decline from the Sep.’11 highs maintains downside targets towards US$1096.00+/- and silver to US$ 15.50. Meanwhile, crude oil remains at the low-end of its recent decline to 79.78 and showing no immediate signs of lifting higher in any measureable counter-trend rally. Next downside targets are to 74.70+/- and there is a risk that the current decline into year-end is targeting levels towards 67.77+/- for the completion of a multi-year expanding flat pattern prior to joining an upsurge when the next stage of the ‘inflation-pop’ kicks in early next year. 23rd October 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

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